MONTREAL — Hermann Gruenwald didn’t entirely set out to be a humanitarian and a patriot when he began his latest business venture. Compulsively entrepreneurial, he was as much motivated by a survival instinct that has been with him since the days, 70 years ago, when he was a prisoner in Auschwitz. But when others benefit from what he does, so much the better.

Four years ago, Gruenwald, then past 80, was at a trade fair in France, a visit he makes annually, when a label on some cotton goods caught his eye. It said Cotton made in Africa (CmiA). Intrigued, he looked up the label on the Internet and discovered the world of fair trade.

At the time, his company, Reliable Hosiery Inc., needed an edge, and Gruenwald saw one by joining smallholder farmers in sub-Saharan Africa. They would be allies in survival, his and theirs.

Gruenwald has been the maker of many things over the years — fur coats, shoes, lampshades, undergarments — but hosiery became his core business in 1959 when he started Reliable. He helped introduce pantyhose to the Canadian market, liberating women from garter belts and seamed stockings.

Reliable thrived during the era when Montreal was Canada’s manufacturing hub, but nothing stays the same. Garment manufacture began to move offshore to cheap-labour countries in Asia. Tariffs were lowered in 2003 and quotas removed in 2005. At the same time, a rising Canadian dollar made imports ever more attractive. Net result: an industry that had once been a mainstay of the Montreal economy was dealt a body blow.

Direct employment in garment manufacturing in Canada went from about 100,000 at the turn of the century to about 30,000 in 2010, according to Bob Kirke, executive director of the Canadian Apparel Federation, and many thousands of those jobs were in Montreal’s north end garment district.

Some companies adapted by offshoring their production while keeping their design and management offices in the city. Gruenwald’s strategy was to double down. He cut Reliable’s labour costs by installing new equipment, almost fully automating his north end garment district factory, and he kept spinning.

Automation helped for a while, but there was another problem — women weren’t wearing pantyhose as much as they used to. So he added socks to his production line.

Socks are a low-margin item. Making them wasn’t a problem, but, in the grip of the Asian import tsunami, selling them was. Enter the cotton farmers of sub-Saharan Africa.

Cotton made in Africa (CmiA) was created by the Aid by Trade Foundation, a non-profit organization founded in 2005 by German businessman Michael Otto, chairman of the Otto Group, an e-commerce and mail order company headquartered in Hamburg. Aid by Trade’s focus is rural Africa and its goal is to find a better, non-governmental, way to foster environmental protection and development there. In its formative stage, CmiA was supported financially by the Bill and Melinda Gates Foundation and the German government.

It’s easy to discern the appeal of Otto’s brainchild. CmiA cotton is grown by 660,000 farmers in seven African countries. It is bought and ginned by companies in those countries who are vetted by CmiA for fair practice and pricing. For example, as CmiA explains on its website, a verification process ensures that neither slavery nor child labour is used in growing or ginning of cotton.

The cotton Reliable buys is sent to to Ethiopia for spinning and to Turkey for dyeing and resale to manufacturers.

The manufacturers are picked by CmiA and licensed to display the CmiA fair trade label when their products are retailed. The licensing fees are used to fund development programs among the farmers who supply the cotton.

It means that farmers, besides being able to market their harvests more advantageously, are taught basic veterinary skills and how to create compost pits whose contents fertilize their fields. Schools for their children are built and the advancement of women is promoted through Cotton Women Clubs.

Smallholder harvested cotton is more environmentally sustainable, CmiA says. Farmers rely entirely on rainwater for their crops, while plantation-grown cotton typically takes five cubic metres of irrigation-sourced water per kilogram of ginned cotton. Smallholder growers also use fewer pesticides.

So fair trade cotton is a good thing. But it’s not a sure thing. Barriers remain at both ends of the producer and manufacturer supply chain.

In return for its license, Reliable has exclusive use of the CmiA label in Canada. In theory, Gruenwald could manufacture any cotton product, but he’s sticking to what he knows, and that’s socks. A lot of socks.

Reliable, with it state-of-the-art equipment, has the capacity to produce a thousand dozen pairs a week, Gruenwald said. The problem comes in selling them.

CmiA licensing adds about 20 cents a kilo to the cost of yarn, which amounts to only a few cents per pair of socks, but the competition in this market is such that it is not negligible.

“Because we are fully automated, we are able to sell at the same price as the importer on the medium and higher-price products,” Gruenwald said.

But it is still necessary to find retailers who are willing to absorb the extra cost of the higher-end product and to overcome the mindset that domestically manufactured products can’t compete.

Fair trade manufacturing in Canada “is not a slam dunk,” said Apparel Canada’s Kirke. “Not that many people recognize the branding. Not that many people will pay more for it. But, at the same time there is potential. The challenge has been that companies haven’t told the story.”

Gruenwald offered his own example of how hard it is to persuade buyers from retail chains to take a Canadian product over an import. “I had a meeting with a buyer — we’re not going to mention any names — who felt our price was too high. I put the question to him: ‘If I were to give you the same price, better quality, as an import, what would be your position?’ And the buyer said it wouldn’t make any difference.”

If cheap imports remain a problem for Canadian manufacturers, smallholder farmers competing in an open market have even bigger challenges. American subsidies to its domestic industry have seriously depressed the price of cotton. In 1990, it was about US$2 a kilo. Today it is US$2.07.

According to an Oxfam report, American subsidies in 2002 to its own cotton farmers amounted to US$3.9 billion, more than the total value of the US$3 billion harvest that year and more than the entire GDP of Burkina Faso, a country in which more than 2 million people depended on cotton cultivation. Not surprisingly, the price of cotton hit near rock bottom 2002, just under US$0.88 a kilo.

Appeals to the World Trade Organization from other cotton producers led the U.S. to reduce its subsidies by about 10 per cent in 2007, but the collapse of the WTO’s Doha round trade negotiations on farm subsidies the following year has left developing-nation producers at a continuing disadvantage.

The resilience of Asian sweatshop production hasn’t helped either. As labour costs have gone up in China, factories have moved to other low-wage countries such as Bangladesh, Vietnam and more recently, Myanmar.

The collapse of the Rana Plaza garment factory in Bangladesh in which 1,129 people died last year, underscores the intense competitiveness of global garment manufacture in the quest to produce the cheapest garments possible. “We haven’t seen evidence that the race to the bottom in labour conditions is over yet,” said Bob Jeffcott, a policy analyst with Toronto-based Maquila Solidarity Network.

Despite the formidable obstacles, there is good news at both ends of the alliance between the African farmers and Gruenwald. A few weeks ago, Cameroon became the seventh country to join CmiA, adding 226,000 farmers to its roster. CmiA now estimates that 4.8 million Africans benefit directly or indirectly from its fair trade cotton initiative.

Reliable, meanwhile, has won two important customers to its CmiA socks: Roots Canada Ltd. and the big daddy of retailing, Walmart Canada Corp., which has begun selling them with a fair trade label on its George brand.

That Walmart, not known for making concessions on price, should be on board, is not as unusual as it seems. In the U.S., the company has moved to buying more from American suppliers, and the idea appears to be spreading north.

“They were smart to recalibrate and say maybe we can use local importers more and even domestic manufacturers where they can meet our price delivery standards,” Kirke said.

The marketing power of doing good also cannot be discounted. “I think we got into Walmart because of the fair-trade cotton,” Gruenwald said.

As for other retailers, he said, “I’m promoting the idea that they should seriously look at supporting a Canadian manufacturer.” Conversations with Canadian consumers lead Gruenwald to believe they would willingly pay a few more cents for a pair of socks made in Canada.

Reliable Hosiery is not alone in it bid for survival. That’s the story of the Canadian garment industry, and to a remarkable degree it has succeeded, sustained by the savvy and toughness of people who built it.

“If you look around there are still world-class garment manufacturers in Montreal,” Kirke said. “Aldo, Peerless, Gildan. I don’t think there are many industries in Canada that could rhyme off (several) of the world’s best companies. … They don’t look the same as they used to, but they still are amazing companies and they were built by people of the same generation as Hermann Gruenwald. It’s a remarkable story.”

Bryan Demchinsky, a former Business editor at The Gazette, collaborated with Hermann Gruenwald on his memoir, After Auschwitz, published by McGill-Queen’s University Press in 2007.

CLARIFICATION: A paragraph pertaining to Cotton Made in Africa was edited out of this story for clarity purposes.

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